CO2TIME: new standard form for the carriage of liquefied CO2

CO2TIME was released on 30 April 2026 and is the first standard-form time charterparty specifically designed for the carriage of liquefied CO2.

As interest grows in carbon capture, utilisation and storage (CCUS) throughout Europe and Asia, substantial investment and development has been made in infrastructure to transport and store captured emissions. It is apparent that shipping will play a crucial role in connecting industrial emitters, such as factories and power plants with offshore or remote CO2 storage sites. Captured carbon may also be used to create synthetic fuels or injected into oil fields to help extract remaining oil.

Without a new standardised contract, parties would have to rely upon existing LNG or gas charterparties. While these forms provide a useful starting point, they are not fully suitable and therefore create uncertainty, risk and complications. The introduction of CO2TIME therefore provides a much-needed standardised framework which will now increase confidence across the industry and support further market development.

Although primarily focused on CO2, the charterparty has been drafted flexibly enough to be used for other liquefied gases. In order to ensure familiarity, the charterparty has been developed from existing gas tanker chartering principles and adapted to accommodate regulatory, technical and operational characteristics of CO2. This approach is particularly attractive as it enables parties to rely upon well-established legal interpretations and will reduce the amount of time involved in negotiating bespoke agreements/clauses.

A central theme of this charter is that liabilities and costs are assigned to the party with operational control. This is not generally an approach that is adopted in other charterparties which usually follow more rigid allocation structures of liability between owners and charterers. However, the approach taken in CO2TIME is a more commercially sensible approach factoring in risk and decision-making authority involved in the transportations of CO2.

Key features of CO2TIME

Technical Annex

The Technical Annex is one of the most significant components of the charterparty. This Annex defines the vessel’s cargo containment system, operating parameters, permitted cargoes and operational limitations.

A lot of the charterparty’s risk allocation provisions are reliant upon these technical descriptions, and it is therefore critical that care and attention is paid to ensure that the information provided within this Annex is accurate. Any inaccuracies could lead to significant operational and liability implications.

Emissions clause – Clause 33

Unlike traditional emissions clauses, the purpose of this clause is to govern who is responsible for the greenhouse gas (GHG) emissions that are produced from the cargo itself as opposed to those produced during the operation of the vessel.

Separately, (at clause 32) the charterparty incorporates BIMCO ETS CLAUSE 2022, thereby avoiding overlap and/or double counting.

The risk allocation of this clause takes a similar approach to other risk allocation clauses within the charterparty whereby it is aligned with operational control. Since charterers control the nature of the cargo, cargo related emissions also remain their responsibility.

However, the clause contains an important carve out exception where the emissions arise due to owners’ breach of charterparty. A breach includes unseaworthiness and other express contractual obligations. In such instances, it is acknowledged that the underlying cause of emissions falls within owners’ responsibility and therefore, charterers are relieved from liability.

Current regulatory frameworks only focus on emissions generated from fuel combustion involved in shipping operations and do not consider cargo related CO2 emissions.

Even though these cargo related emissions are not yet subject to monitoring or allowance surrender obligations, CO2TIME has been drafted to recognise that public law may evolve. By separately addressing cargo emissions, the charterparty is somewhat future proofed against future cargo-based emissions regulations. However, it is critical that should future regimes address cargo related emissions, the parties reconsider this clause to determine whether any amendments are required.

In Transit Loss – Clause 20

Given the physical characteristics of CO2 and its use within this the industry, there is the risk of loss of cargo during carriage. Clause 20 has therefore been designed to take these risks into account. The clause removes liability from owners in circumstances of cargo shortage where such shortage has been caused by either incondensable matter or falls within the tolerance threshold. In all other circumstances where owners may be liable, the charterparty provides clear instructions on how the loss shall be calculated and evidenced.

Vapour Return – Clause 21

Vapour return is a bespoke clause that has had to be considered in CO2TIME. In order to manage pressure, safety and environmental risks, specific loading or discharge ports may require vapours from shore to be returned to the vessel’s cargo tanks. Evidently, this may expose owners to risks such as contamination of cargo tanks or vessel systems. The purpose of this clause is to ensure owners are not left open to liability for risks that are out of their control. Since charterers control the vessel’s employment and govern which terminals she is to call at, the clause has been drafted to shift liability towards them.

Owners are asked to approve the shore tank certificate of quality before the vessel is able to connect to the vapour return lines, but this approval is not to be unreasonably withheld. Charterers are then to provide owners with an indemnity protecting them from the associated risks. Such an approach recognises the risks associated with vapour return and reallocates that risk to the controlling party.

The Future of CO2TIME

The likelihood is that CO2TIME will become a benchmark charterparty for future CCUS projects.

CO2 is a cargo that behaves differently to other commonly transported gases such as LNG. It is highly sensitive to temperature, pressure and impurities which can lead to cargo instability, pressure spikes and the creation of dry ice.

Due to the requirements within the industry for CO2 to meet strict purity standards, there is a severe risk of rejection at discharge should the cargo become contaminated. Alternatively, a contaminated CO2 cargo can lead to a severe risk of corrosion, cracking of metal components and/or valve failure. We, therefore, expect to see disputes regarding cause of contamination and whether the vessel maintained cargo conditions.

Further, the rapid pace of industry development creates the risk that the operational and regulatory aspects may develop faster than the standard-form amendments, thus resulting in the likelihood of extensive rider clauses being required. Nevertheless, the existence of a standardised form undoubtedly remains a positive step for the industry.

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